Saturday, May 18, 2013

The Imbalance Between Work Visas, Job Growth and US College graduates

Sen Orrin Hatch (R-Utah)

Certain high tech computer companies have sent a letter to President Obama recently complaining about the rejections of some visa applications. In the past rejections were nearly absent but apparently the rejection rate has gone up. This infuriates these large international corporations. It seems like they are on the verge of collapse if they cannot hire foreigners. Or maybe it's just that they are so use to getting their way that government intervention in their policies gets them mad. In any case, their actions seems to have received the attention of Orrin Hatch.

Recently immigration legislation has been put on hold, largely due to amendments introduced by Senator Hatch (R-Utah), which would ease limitations on US companies to hire foreigners for US jobs in the Computer and Engineering disciplines.

For example, Mr. Hatch would like to increase the number of foreign H1-B visas allowed even above the 180,000 number which has already been offered (a nearly three fold increase over previous years.) He would also like to eliminate the requirement that US Companies look for qualified Americans for the job before hiring a foreign worker. He suggests permitting an honor system where US companies are simply trusted that they have looked for and not found any American worker who can do the same job as their visa candidates.

With all of the talk about a lack of jobs in America, the high unemployment rate and the difficulty college graduates are having finding jobs, it seems contradictory for Republicans to find new ways to reduce the job market for American citizens, especially in the face of their so-called pledge to focus on "jobs, jobs, jobs."

Are American college graduates too stupid to do the jobs that these huge American Corporations are offering? Are the number of qualified graduates so low in comparison to the number of new job offerings that these Corporations must use the visa system to find qualified workers? Are American Corporate managers too busy to find and train American workers? Are there any cost differences that make a foreign worker much more desirable than an American worker? How does the government audit the fact that American workers are not qualified or available before they issue visas? The answers to these questions would help shed some light on the subject.

First, let's review a high level picture of the types of visas available.

There are a number of different pathways that a high tech company can use to employ foreign workers in the United States. These pathways vary by the kinds of visa available. These include H1-B, L-1B, L-1A, B-1 and OPT. Although the H1-B visa is the most well known, the other visa pathways serve the same purpose in that the applicants are foreigners and can take jobs in America.

The H1-B, B-1 and OPT allow foreign workers to be hired and work for the US company in the United States. The L-1A and L-1B allow foreign workers who are already hired in a foreign office of the US company to be transferred to the United States office of that company. The L-1A is for management positions while the L-1B is for non-management positions.

All visas have duration limits but for foreigners of some countries the duration can exceed 10 years with extensions. Once a foreign worker has taken an American based job, they can remain there for a long time and each year new foreign workers can obtain new visas. When viewed from a duration aspect, the number of high-tech H1-B foreign workers in America increases each year by 65,000 to 85,000 workers. It will be even more after 2013. Over ten years, this means that on average 750,000 American jobs have been filled by foreign workers. Looked at in a different way, this means that the number of college graduates who major in Computer Science will not have much luck finding jobs, especially when the number of foreign H1-B visas is increased to 180,000 per year in 2014. It is little wonder that college students have turned away from science, technology, engineering and math majors.

L-1B and L-1A visas appear on the surface to be an expected entitlement of major Corporations. Since the employees that apply for these types of visas already belong to the mother corporation, although in a foreign office, why shouldn't they be allowed to transfer freely between countries? One reason is for the protection of American workers who are also working for the same corporation. Another is in fairness to American workers who might want to work for the corporation.

H1-B and US Workers Salary Comparison

Under current US law, using their own foreign workers, American corporations can hire in the foreign office and transfer the worker to the American office after one year. In this way, the company can plan to replace or displace American workers each year simply by hiring in the foreign country. Although H1-B visa law suggests that corporations pay the visa worker a wage that is competitive wage to US workers, the L-1B and L-1A visas have no such provision. When a foreign worker is hired, the salary of that worker in his own country is usually tens of thousands of dollars less than their American counterpart. It's then just a matter of economics for the American corporation to take jobs away from Americans. Patriotism doesn't pay the multi-million dollar salaries of the C-level executives of such companies.

Looking at the Bureau of Labor Statistics findings for the annual increase specifically for new Computer related job opportunities since 2010, we find expected job growth is about 72,000 jobs per year. This compares to 85,900 computer graduates from American colleges each year. That is less growth in the computer job market than there are college graduates on an annual basis. This does not give any support to the idea that American companies must look to foreign countries for job applicants.

When you combine all of the visa pathways available to American Corporations, the number of US jobs filled by foreign workers far outweighs the availability of new jobs. This gives evidence that US Corporations are not just filling new jobs, they are back-filling jobs being taken away from American workers. Perhaps through attrition or outright layoffs, American corporations are reducing their costly American workforce while at the same time screaming for more visas for foreign workers.

American Corporations are also using 3rd party foreign consulting agencies to find H1-B contract workers at reduced cost. In this way, the American corporation avoids having to give a competitive salary since the H1-B holder is not their employee.

When Republicans claim that increasing work visas helps bring prosperity to America they are really talking about the wealth of their constituents. America to a Republican in office doesn't have the same definition as it does to 99% of us.